Oct. 14 (Bloomberg) -- Iran’s establishment has split into
rival camps in the run-up to tomorrow’s resumption of nuclear
talks, and no one has a better view of the divide than the
Islamic republic’s chief negotiator.

Foreign Minister Mohammad Javad Zarif checked into the
hospital last week suffering from stress he blamed on
conservative newspapers at home. Zarif said he was misquoted as
part of a backlash against President Hassan Rouhani’s drive to
promote U.S.-Iranian reconciliation at the United Nations last
month.

At Tehran University last week, Friday prayers turned into
a demonstration against détente. The chants of “Death to
America” were encouraged by prayer leader Ayatollah Ahmad
Khatami. “As long as there is American evil, this slogan will
endure across the nation,” Khatami said, according to Fars news
agency. The previous week, the imam had quelled similar chants.

As negotiators in Geneva prepare for a two-day session, the
first top-level contact between American and Iranian leaders in
decades has led to surging expectations for an accord over the
Islamic republic’s nuclear program. The public argument in Iran
over the U.S. trip, with newspapers close to Supreme Leader
Ayatollah Ali Khamenei weighing in against a thaw, suggests that
Rouhani may have limited room to make concessions.

“Rouhani is talking about making foreign policy based on
national interest rather than based on ideology,” said Mohammad
Javad Akbarein, a former Iranian cleric now based in Paris.
“Conservatives like Khatami are linking anti-Americanism to the
regime’s own survival. They want to create extra red lines.”

Economic Promises

Rouhani was elected in June after campaigning on a pledge
to ease Iran’s global isolation and repair an economy squeezed
by sanctions. The U.S. and its European allies have tightened
financial and trade curbs to curtail a nuclear program that they
say may be cover for building nuclear weapons.

Iran, which says it’s developing the technology solely for
peaceful purposes, has seen oil output slump to the lowest in
more than two decades under the sanctions, while inflation
surged above 40 percent and the currency plunged.

The country’s officials outlined their position during the
last weekend before the talks. Abbas Araghchi, deputy foreign
minister, said on state TV yesterday that Iran won’t ship out
any of its stockpile of enriched uranium. “We will negotiate
about the form, size and level of enrichment, but transporting
the enriched stockpile out of the country is one of our red
lines,” he said.

Iran’s Pitch

Negotiators plan to put forward a three-step proposal at
the talks, according to the Iranian Students News Agency, which
includes seeking a commitment from the so-called P5+1 group to
recognize its right to enrich by the end of the negotiations.

Zarif said he’ll seek to avoid a “resultless process,”
according to a post on his Facebook page. “Iran’s negotiating
will try to change the situation of the past six years that
didn’t lead to any agreement,” he wrote.

After addressing the UN last month and pledging to work for
a diplomatic solution, Rouhani spoke by phone on Sept. 27 with
U.S. President Barack Obama, the first time the leaders of the
two nations had spoken directly since Iran’s 1979 Islamic
Revolution.

Israeli Concern

Israel, which along with the U.S. has threatened military
action to stop Iran getting nuclear weapons if diplomacy doesn’t
work, has urged Obama not to take Rouhani’s promise of a deal at
face value. The Iranian leader has stuck to the line taken by
his predecessors that Iran is entitled to enrich uranium and
won’t give up the right.

“The window for diplomacy is cracking open,” U.S.
Secretary of State John Kerry said in a speech yesterday to the
American-Israel Public Affairs Committee. Still, “we are
mindful of the need for certainty, transparency, and
accountability in the process.”

“No deal is better than a bad deal,” Kerry said.

After Rouhani’s return, the commander of the Revolutionary
Guard Corps, Major General Mohammad Ali Jafari, said the
president had made a “tactical mistake” in talking to Obama.
In his first public comments, Khamenei, Iran’s top decision-maker, gave only qualified support to Rouhani’s diplomatic
efforts.

‘Not Appropriate’

“Some of the things that happened during the New York trip
were not appropriate,” Khamenei wrote on his website. “Because
we believe the U.S. government is untrustworthy, arrogant and
irrational, and one that reneges on its promises.”

Khamenei had said he wasn’t opposed to direct talks with
the U.S. to resolve the nuclear standoff, though he was not
optimistic. In a speech on Oct. 5, he called the U.S.
“untrustworthy, arrogant, illogical and a promise-breaker.”

“The supreme leader had approved nuclear diplomacy,” said
Ali Vaez, a senior analyst at the International Crisis Group in
Istanbul. “He hasn’t approved a rapprochement with the U.S.”

The signs of a backlash against Rouhani’s diplomacy
strengthened on Oct. 8 with a front-page article in the Kayhan
newspaper, which is considered close to Khamenei.

Nuclear Diplomacy

It reported that Zarif had told lawmakers in a closed-door
session that the Rouhani-Obama telephone conversation was a
mistake. Kayhan also quoted Zarif as saying that his own meeting
with Kerry had been too long.

In an unprecedented move, Zarif posted his complaint
against the newspaper on his Facebook page, denying the veracity
of the article. Then he checked himself into a hospital
complaining of back pain.

The objections from conservatives don’t necessarily mean
that Khamenei is against the diplomatic initiative, said Suzanne
Maloney, an Iran specialist at the Brookings Institution, a
public policy organization in Washington.

“Zarif is playing the role of the victim to gain
sympathy,” she said. “Zarif came to New York and met everyone,
and presumably that was with a nod from the Supreme Leader.”

There was support for Zarif and Rouhani from a section of
the Iranian media. Arman and Aftab newspapers quoted him on the
front page as saying he wouldn’t let domestic opponents ruin the
“great victory in New York,” a reference to Iran’s diplomatic
outreach after years of being treated as a pariah under
Rouhani’s predecessor, Mahmoud Ahmadinejad.

For critics of Rouhani and Zarif, the handshake and
friendly words with U.S. leaders may be harder to stomach than
anything that happens this week or at subsequent nuclear talks,
said Alireza Nader, an analyst in Washington for the Santa
Monica, California-based Rand Corp..

“They may support some degree of flexibility on the
nuclear issues,” Nader said. “But to suddenly not view the
U.S. as the great enemy may make them quite uncomfortable.”